JetBlue Enters Alaska’s Bread and Butter Market

The airline with the Eskimo on its tail has to be feeling a little uneasy right now after JetBlue announced it would enter Alaska’s flagship Seattle to Anchorage market. The motivations for this move seem a bit murky, but the payoff could be huge.

The only other airline in this market is JetBlue. It must be a decent market because JetBlue flies it twice a day. Of course, JetBlue appeals to the Boston crowd more. And though Alaska appeals to the San Diego crowd, its partnerships with Delta and American make that market attractive to a lot of frequent fliers on either end.

Regardless of whether or not this is a retaliatory move, it’s bad news for Alaska. In fact, Alaska has to be feeling pretty nervous about this. Anchorage to Seattle is a great market and Alaska owns it. Even during the slow winter, Alaska flies 11 daily flights on a weekday. In the summer? You’re looking at basically hourly flights with 22 a day. These airplanes have a lot of people onboard, but they also are full with cargo in the belly. It’s a very good market.

But what’s even more remarkable is that this big market is largely competition-free. There used to be more flights before airlines had the range to fly nonstop from their hubs to Anchorage. But now most have walked away.

United still has one or two flights a day depending upon the season, but that’s it. And United is certainly not trying to be a pricing leader in this market. But JetBlue is a different story. Even though it’s only coming in with one flight a day, if Alaska ignores it, this service could grow quickly.

We don’t know what JetBlue pricing will look like. That’s another reason this announcement seemed a little suspicious with it’s timing. Fares aren’t filed and neither are flight schedules. No pricing was given in the press release; not even an introductory sale. But it’s safe to assume that JetBlue is going to come in and charge a lot less than what Alaska charges today.

How good is this market? For the first half of this year, the average nonstop fare in the market was $295 each way. (Alaska alone was a few bucks higher.) That was roughly the same average fare as we saw in the lucrative LAX to JFK market. These are total average nonstop fares, so that includes all the high dollar premium traffic flying between LA and New York. Oh, and the JFK to LA flight is 1,000 miles longer.

Sure, the Seattle to Anchorage market is smaller than LA to JFK by a factor of 10 from a passenger number perspective, that doesn’t mean there isn’t room for another airline to come in and make some good money.

Now to be sure, Alaska owns this market and that won’t change. It has all the cargo deals and it has locked up the business traffic that goes back and forth. JetBlue won’t change that with one or even a couple flights per day, and that’s why JetBlue won’t try to fly this market during the winter, at least to start. But JetBlue can get a lot of tourists to fly during the summer, and that’s exactly the plan.

With one flight, it’s not a threat to Alaska, but if it does well, Alaska can put more airplanes in there. And the threshold for success might be relatively low. JetBlue pulled in about $190 each way per person on its Anchorage to Long Beach route last year. That was more than $30 less than Alaska brought in from LAX, but JetBlue is bringing the route back again next summer for the third year in a row.

With higher fares and a bigger market, Seattle has to be attractive to JetBlue. Even if this is just a response to Alaska’s San Diego to Boston flight, it was just a matter of time before someone entered that market.